Bangkok--11 May--Standard & Poor's
Standard & Poor's Ratings Services said it assigned its 'AA' rating to Wisconsin's general obligation (GO) refunding bonds of 2011, series 1, and affirmed its 'AA' rating on the state's outstanding GO debt. We also affirmed our 'AA-' rating on the state's appropriation bonds and master lease certificates of participation, and the 'A-1+' rating on the state's GO commercial paper (CP) and extendible municipal CP notes. The outlook on the ratings for the bonds and certificates is stable.
"The stable outlook reflects our expectation that Wisconsin's trend of fiscal discipline, which has significantly reduced structural budget deficits in the past several years, will continue, and that the state will act purposefully and quickly to address any budget imbalances," said Standard & Poor's credit analyst John Kenward.
The rating reflects our view of the state's:
- Strong government framework with a constitutional balanced budget requirement, and a statutory provision that gives GO debt service first claim on state revenues;
- Proven ability to make budget corrections in midyear to maintain fiscal balance with low, but adequate, general fund reserves;
- Diverse economy, which has shown resilience in recent years. It has a large and diverse manufacturing sector, and an unemployment rate that historically has been below the national average; and
- Moderately high debt burden offset by a fully funded pension system, and only an implicit other postemployment benefit unfunded liability.
Mitigating credit factors are our opinion of Wisconsin's:
- Low level of general fund operating reserves relative to other 'AA' rated states and a reliance on one-time revenues and fund transfers for budgetary balance; and
- Large generally accepted accounting principles general fund deficit, which deepened to $2.94 billion at fiscal year-end 2010 (June 30), from $2.71 billion at the end of 2009.
- The state will use the series 2011-1 bond proceeds to refund $225.51 million of privately-placed GO refunding notes that it issued in April 2011 to restructure certain amounts of GO debt due on May 1, 2011, in order to provide budgetary relief for the current fiscal year. The state will also use the remaining proceeds to refund certain other GO debt for savings.
RELATED CRITERIA AND RESEARCH
USPF Criteria: State Ratings Methodology, Jan. 3, 2011
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Edward Sweeney, New York (1) 212-438-6634,
[email protected]
Analyst Contacts:
John Kenward, Chicago (1) 312-233-7003
Robin Prunty, New York (1) 212-438-2081